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Reviewed Jan 07

M Rhodes

Leading Change

Harvard business School Press


John P Kotter

In many ways this is the seminal work on change in the corporate environment. Now used as the
primary change model on several MBA courses, Kotter’s insights and understanding of the change
process, the problems that arise has much to offer the modern manager and leader. I consider it
essential reading for anyone in the management arena.

Chapter 1 Why Firms Fail

There are several drivers of change that force a competent managers to implement change in their
organisation. These drivers of change include

Drivers of change:
• Technology
• Internationalisation of economy
• Maturation of markets in developed countries
• Fall of communism
• Globalisation
• Increased competition and speed of competition
• Increasing market size
• Fewer market entry barriers
• Large scale change in organisations
o Reengineering
o Restructuring
o Quality programmes
o Mergers and Acquisitions
o Strategic change
o Cultural change

In implementing change Kotter suggests that there are 8 factors that lead a firm to failure:

Why Firms Fall:

• Too much complacency
• Failing to create a sufficiently powerful guiding coalition
• Underestimating the power of vision
• Not communicating the vision
• Permitting obstacles to block the vision
• Failing to create short term wins
• Declaring victory too soon
• Neglecting to anchor the changes into the corporate culture

These failings lead to:

• New strategies not being implemented well
• Acquisitions not achieving expected synergies
• Reengineering that takes too long and costs too much
• Downsizing that does get costs under control
• Quality programmes that don’t deliver hoped for results
Chapter 2 Successful change and the force that drives it

To competently and robustly drive a change process, Kotter suggests the following 8 stage process:

8 Stage process of creating Major Change

• Establish a sense of urgency – To break the team out of their complacency
• Create a guiding coalition – As a focus of the change process and a driver to achieve results
• Develop a vision and strategy – Know where you want to be and how to get there
• Communicate the change – Spread the message by every means possible
• Empowering Broad Based action – Encourage the team to ‘try’ plus remove obstacles
• Generate Short term wins – Achieve something early to gain confidence and commitment
• Consolidate gains and produce more change – Use the confidence to increase change
• Anchor the new approaches into the culture

Management Versus Leadership

Management Leadership
Planning and budgeting Establishing direction
Organising and Staffing Aligning attitudes and emotions
Controlling and problem solving Motivating and inspiring

Leads to Leads to

Predicatbility, order and consistency in output Change, growth, commitment to the vision

Chapter 3 A Sense of urgency

Complacency can come from:

• Too much happy talk from senior management
• The absence of a major and visible crisis
• Too many visible resources
• Low overall performance standards
• Organisational structures that focus employees on narrow functional goals
• Internal measurement systems that focus on the wrong performance indices
• A lack of sufficient feedback from external sources
• A kill the messenger, low candour, low confrontational culture
• Human natures capacity for denial when busy or stressed

Ways to increase the Urgency level:

• Disclose or create a crisis such as financial loss, competitor performance
• Eliminate obvious examples of excess
• Set revenue, income, productivity, customer satisfaction and cycle time targets that cannot
be reached by usual business practises
• Stop measuring narrow functional performance goals. Make people accountable for broader
business performance
• Give the work force more information on financial and customer performance
• Insist people talk to unsatisfied customers, suppliers and shareholders
• Use consultants and other means to force more relevant data into discussion
• Expose the firms problems to the workforce
• Expose people to the potential opportunities and the rewards that achieving such
opportunities brings

Chapter 4 Creating a guiding coalition

The first step in building such a coalition is to fill the 4 essential characteristics:
• Position Power – Ensure that there is sufficient leadership from the top to communicate the
degree of commitment behind the change
• Expertise – The team needs the expertise to make the informed and germane decisions
• Credibility – Is the group large enough and have the correct reputation
• Leadership – Does the team have the proven leadership to drive the change process

Chapter 5 Developing Vision and Strategy

Vision has a way of breaking through emotional and cultural barriers and has characteristics of:
• Imaginable – Conveying an image of what the future will be
• Desirable – Appealing to the interests of all stakeholders
• Feasible – Has realistic attainable goals
• Focused – Is clear enough to provide guidance to decision makers
• Flexible – Is general enough to encourage individual initiative
• Communicable – Needs to be explainable in under 5 minutes

Such visions should also include the input of several stakeholder groups, including the employees.

Chapter 6 Communicating the vision

Kotter suggests that all of the above will be in vain unless the information is given to the team. His
key elements for effective communication of vision are:
• Simplicity – No jargon or technobabble
• Metaphor, analogy and example rich – a verbal picture that is easily understood
• Multiple forums – Big meetings, small briefings, memos, internal comms.
• Repetition – Hammer the message home
• Leadership by example – Behaviour from senior management that is consistent with the
• Explanation of seeming inconsistencies – Inconsistencies undermine credibility
• Give and take – listen as well as broadcast

Chapter 7 Empowering Employees for Broad Based Action

There are some common barriers to empowerment:

• Formal structures and bureaucracy impeding action
• A lack needed skills undermines action
• Personnel and IT systems make it difficult
• Bosses discourage actions aimed at implementing new vision

Therefore the ways to empower people to effect change are:

• Communicate a sensible vision
• Make structures compatible with that vision
• Provide the training employees need
• Align information and personnel systems to that vision
• Confront supervisors who undercut the needed change

Chapter 8 Generating short term wins

Good short term wins have 3 basic characteristics:

• They are visible and people can see that this is not just hype
• Unambiguous so there is little argument
• Clearly related to the larger scale change

The role of short term wins:

• Provide evidence that the sacrifices are worth it
• Reward change agents with a ‘pat on the back’
• Help to fine tune the vision and strategy
• Undermines the cynics and self serving resistors
• Generates and maintains the support of major stakeholders
• Builds momentum behind the overall change process

Chapter 9 Consolidating the gains and producing more change

Kotter suggests that the key elements of a successful change effort include:
• More change not less occurs as credibility and confidence of the coalition grows
• More help is available as people become committed to the change and management
increases the support
• Leadership from senior management increases generating more urgency
• Project management and leadership from below increase as benefit is identified
• Reduction of unnecessary interdependencies as they are wasteful and not required by the
improving processes

Chapter 10 Anchoring the new approaches in the culture

Kotter suggests that anchoring change in a culture:

• Comes last, not first as shared norms and values need time to be assimilated
• Depends on results as new approaches only stay if they are superior to the old ways in
effort, output or both.
• Requires a lot of talk as people are often reluctant to admit the value of the new approaches
• May involve turnover as sometimes the only way to change the culture is to change key
• Makes decisions on succession crucial as promotion processes need to support the new
approaches not return them to the old ways

Chapter 10 The organisation of the future

Kotter;’s discussion of change has some clear guidance for organisations of the future:
There needs to be:
• A persistent sense of urgency
• Teamwork at the top
• People who can create and communicate vision
• Broad based empowerment
• Delegated management for excellent short term performance
• No unnecessary interdependence
• An adaptive corporate culture

The route to the next stage in organisational structure and behaviour is not easy but Kotter offers
some comparisons that help the decisions process.

Twentieth Century Twenty First Century

Structure Structure
• Bureaucratic • Non-bureaucratic with fewer rules and
• Multi-levelled employees
• Organised with the expectation that • Limited in levels
senior management will manage • Organised with the expectation that
management will lead and lower levels
will manage
Systems Systems
• Depend on few performance information • Depend on many performance systems
systems providing data on customers especially
• Distribute performance data only to • Distribute performance data widely
executives • Offer management training and support
• Offer management training and support systems to many people
systems for senior people only
Culture Culture
• Inwardly focused • Externally orientated
• Centralized • Empowering
• Slow to make decisions • Quick to make decisions
• Political • Open and candid
• Risk averse • More risk tolerant

Chapter 12 Leadership and Life Long Learning

It is no surprise that, in the 21st century, people need to be well informed. Kotter supports a variety
of different learning processes such as the learning organisation. He therefore suggests that a 21st
century executive has:
• Personal History
o Innate capabilities
o Childhood experiences
o Job and educational experiences
• Competitive Drive
o Standards
o Desire to do well
o Self confidence in competitive situations
• Lifelong Learning
o Willingness to seek new challenges
o Willingness to reflect success and failure honestly
• Skills and Abilities
o Knowledge
o Leadership skills
o Other Skills
• Competitive capacity

Lifelong learning requires the mental habits of:

• Risk Taking – willingness to push yourself out of your comfort zone
• Humble self reflection – Honest assessment of success and failure
• Solicitation of opinions – aggressive collection of information and ideas from others
• Careful listening – Propensity to listen to others
• Openness to new ideas – willingness to view ideas with an open mind

Rating: 4/5